ABSTRACT
In this study, effective economic factors on the import of forest industry products were investigated. Data used in the time series analysis covered a period of 18 years from 1985 to 2002. Double-log linear function was used to analyze the import model. The imported forest industry products in Turkey were considered to be a function of domestic production value, domestic prices, national income per capita, lagged import value (t-1), exchange-rate (TL/$) and export values. The parameters were evaluated using a regression analysis. The results indicated that imported forest industry products in Turkey have largely been effected by national income per capita, domestic prices, export values and exchange-rate variables.
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DOI: 10.3923/jas.2006.357.361
URL: https://scialert.net/abstract/?doi=jas.2006.357.361
INTRODUCTION
Forest industry is one of the most important of 64 industries, among the main production sectors in Turkey. Forest as a natural resource supplies products to many sectors with renewable characteristics. Therefore, the demand for forest products is increasing. Forest industry, being a sector of flexible structure is in harmony with different use of inputs-outputs and also being on the top of whole sectors requiring intensive labour. Since the technology in the forest industry requires low-skill labour, improvement of forest industry is crucial in the development of a country.
Forest industry supplies raw material to many sectors in the production of wood origin products. Therefore, the forest industry is considered to be Main Primary Industry within the science of industrial economics.
Forest products are divided into two groups as main and end products and forest industry is studied under primary and secondary industries.
The amount of annual import-export and the values of a country are the most important indicators of economic development and the state of integration with the markets of the world. Available sources used by business enterprises in different industry groups and import-export activities have important influences on economic development.
The business enterprises in the manufactured goods industry are the cornerstones of economic development. The productive activities of these enterprises result in competition in the domestic and foreign markets and increase the level of consumption of sources. Thus, the sources of a country have to be extensively analyzed and studied to make them contribute to economic development of the country[1].
The forest industry products of Turkey: The production and the consumption of forest products have recently been increased parallel to the technological progress. In this study, the term Forest Industry Products is used to describe the products of paper and its by-products, furniture, wood and fungi.
The forest industry products within manufacturing industry is an important sector consisting 1.44 of Gross National Products (GNP), 28 of manufacturing industry product value, 1.02 of export value and 0.7% of national employment in Turkey[2] with its added value to Turkish economy in 2002. On the other hand, forest industry products consist of 22% of manufacturing industry in respect of the number of work places and 9% of total employment. The capacity utilization rate of these companies is only 70-80%[3]. However, the higher rates of work place and employment are not adequate to attain the desired development values. The problems faced in business enterprise management is the important management problems[4].
Managements of forest industry products shape its working positions according to the inward conditions with a high ratio and face problems of information management[5].
Table 1: | The values of forest industry products in Turkey (1984-2002) |
However, there are some other problems related to the management[6,7] which make them unable to came on the foreign markets and so make contributions to the development of the country.
Production values and import and export values of forest industry products of Turkey are presented in Table 1.
While the production has been increasing continuously through the years, the import ratios remain higher than those of the production. The production was raised three times between 1984 and 2002[8].
The factors result in higher import ratios need to be studied by an econometric method to determine the structure of the import of Turkeys forest industry products.
MATERIALS AND METHODS
The time series data from 1985 to 2005 (18 years) were used in this study. A transformation into free market economy took place in 1983 in Turkey. Therefore, we decided to take the introduction of free market economy as a starting point on the forest industry products following this transformation.
The State Planning Organization under the Prime Ministry collected the data used in the study from various statistical resources such as the Statistical Yearbook of Turkey published by the State Institute of Statistics (SIS) and the Privatization Commission Reports. In addition, literatures relevant to the field of study have been investigated. The data were analyzed with a Minitab 12.0 statistical package program.
Initially, the parameters of forest industry products have been determined and explained by the method of index numbers. The import model of forest industry products has been analyzed econometrically. The variables of import model used in the study are also explained.
The prices of products and competitive products, amount of domestic production, capacity utilization rates, foreign exchange rate, taste and preference of people, export values and individual incomes are placed among the important variables to determine the import of industrial goods in econometric models used[9-13].
The remarks of the variables used are presented in Table 2.
Double-log linear function was used to analyze the import model. These type of functions have been widely used for import demand analysis throughout the world[1417]. If the double-log linear function is used, partial regression coefficients give the direct elasticity and thus, the results can easily be evaluated.
In statistically testing model, the level of importance was used 1% and reliability 95%.
The closed form of the model could be shown as follow:
and the open form is;
These variables are describe as following:
(IMPt) | Forest Industry Products Import Value (000 $) |
(Qt) | Forest industry product production value (000 $) |
(INCt) | National Income Per Capita ($) |
(Pt) | Wholesale Price Index of Domestic Price of Forest Industry Products (%) Deflator is 1994 = 100 according to Wholesale Price Index) |
(Ext) | Export value of forest industry products (000 $) |
(EXRt) | Exchange-rate (TL/$) |
(IMPt-1) | Lagged Variable. (000 $) (The import value of the year before) |
Table 2: | The remarks of the variables used in the model |
* TL; Turkish Liras (Unity of Turkish Money) |
RESULTS AND DISCUSSION
The results of Turkeys forest industry products import by using double-log linear model are given in Table 3.
Multiple determination coefficient of the model (R-square) is 0.996 and this shows that the variables in the model explain 99.6% of the import variables. Adjusted multiple determination coefficient is 0.994 (Table 3).
F-test was used to determine significance of the function. The results of F-test on 1% importance level was F-estimate>F-Table (449.61>9.89). So the model was meaningful at 1% importance level. The results indicated that it was adequate to explain the effects of independent variables on dependent variable.
A t-test was used to examine the importance of every independent variable in the import demand model. The income per capita (INCt) 1%, domestic price index variable (Pt) 1%, export value variable (EXt) 5%, Exchange-rate (EXRt) 3% and lagged import value variable (IMPt-1) 11% import level were different from zero which means statistically significant. Since the production value (Qt) was 80%, no comment was made on this variable.
Any autocorrelation problem on the models time series was controlled by Durbin-Watson (DW) test. Time series analysis and the use of lagged variable on the model together require autocorrelation to be controlled[18]. Durbin- Watson statistical value of the model is 2.55 (DW value:2.55, k = 6, n = 18, critical values; dl: 0.52-du:1.80). This value indicates the unstable area of critical values table at 1% importance level. Therefore, discussion on the correlation and the study of Von-Neumann statistical values were not meaningful.
Von-Neumann test value is 2.782. V critical values are v = 0.903 ve v = 3.134 on Von-Neumann value table at 1% importance level consequently. Von - Neumann test value is between the v critical values and there wasnt any autocorrelation (v<V test value<v ).
Test and parameter results effecting import demand of Turkeys forest industry products were meaningful at the determined importance levels. The results gives us an opportunity to discuss the model.
The partial regression coefficient of production value of forest industry is 0.069. Since this variable is meaningful 80% after t-test, it wasnt taken into consideration.
When the national income per capita increases consumption also increases during the same time. The partial regression coefficient of national income per capita (INCt) is 0.764. This variable is statistically meaningful at 0.01 levels. 1% increase in national income per capita causes 0.8% increase in forest industry product import when the other variables remain fixed. This high level of elasticity could be explained such that when the income of a person is increased demand for forest industry products also increases.
When domestic price of a product is higher than that of the foreign country and the demand for product exceeds the supply, it is normal to import that particular product from other countries. The partial regression coefficient of wholesale price index of domestic prices of forest industry products (Pt) is 1.062. This variable is meaningful at 0.01 level. When the domestic price index increases 1%, import increases 1.062%. This shows that, the forest industry products import has elasticity in domestic prices of forest products. Therefore, import has a high level of sensitivity to product prices which is an expected fact. As a result, foreign prices of forest industry products had more advantages over that of the domestic prices during the studied period.
Table 3: | The parameters and statistics influencing the import factors |
The higher costs originated from business administration problems of forest industry products in Turkey directly affect the domestic prices. Consequently, the goods in demand above the supply is imported because of more favourable prices.
While the countries are importing products to meet the domestic demand, they could also export the same products to benefit from the foreign price advantages. The partial regression coefficient of export value of forest industry products (EXt) is -0.20. This variable is meaningful at 0.05 level. The negative mark of this variable explains that 1% increase in export value of forest industry products causes 0.2% decrease on import. In other words, forest industry products export has a very low elasticity to import. This low level of export could be related to the price and quality of the product. Proper production to meet the needs of foreign market and a competitive pricing system with the foreign prices could positively affect the forest industry products export.
External value of a currency could directly affect imports. Countries could fulfill more imports in the time of currency appreciation and more exports in time of currency depreciation. The partial regression coefficient of exchange-rate (EXRt) is 0.791. This variable is meaningful at 0.03 level. The negative mark of this variable explains that 1% increase in exchange rate (TL/$) or when the currency depreciation is 1%, the import of forest industry products will decrease 0.8%.
The partial regression coefficient of lagged import value (IMPt-1) is 0.133. This variable is meaningful at 0.11 level. 1% increase in import value of previous year increases 0.13% of the current year. The elasticity of the variable is low and the import value of the previous year has only a little effect on the current year.
CONCLUSIONS
Natural effects and people have continually destroyed forests, which provide raw material for manufacturing some substantial elements of daily life such as paper, wood products like furniture. It is obvious that if continues effort for reforestation is made, forests will make contribution to the economy of the country which would otherwise very serious environmental problems arise.
Forest industry holds a top place among the manufacture industries. However, the need for raw material to be used in forest industry is largely provided by import. The import value of forest industry products is approximately 1-1.4 billion US $. It seems that the country will continue to pay even larger amounts unless necessary measures have been taken and this industry given due importance.
In this study, the forest industry products were studied econometrically to determine the efficient factors of forest products import between 1985-2002 years.
The analyses revealed that any increase in the income per capita and in the prices of domestic forest products results in increase in the forest industry products import. On the other hand, export of the forest industry products and national currency devaluation by US dollar causes decrease in forest industry products import.
Turkish governments have to take necessary measures to supply the forest products through domestic forest resources. First of all, modern management methods have to be employed at the forest industry production. In addition to this, further studies need to be conducted to study on cost efficiency. The forest resources of the country have to be actively used and be renewed continuously. Thus, the contribution of the forest industry products to the economy of the country could be increased and maintained. In the course of time, forestry resources will be good enough to meet domestic demand and to get away from the pressure of import.
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